The present invention relates generally to computerized real estate transactions. More particularly, this invention relates to a computerized searching system for locating multi-party property equity exchanges, developing potential trade scenarios, tracking the details of those scenarios, and helping to analyze the results.
Basic to an understanding of real estate transactions is that the title of real property is owned and the value of the ownership is generally the equity in the real property. If a buyer wishes to acquire ownership of real property, the following conditions must be satisfied: the buyer must be interested in the property, the buyer and seller must agree to the amount of the seller's equity in the property, and the buyer must have access to sufficient liquid capital to meet the agreed-upon sales price. The sales price typically consists of two components: (1) the outstanding encumbrances, and (2) the equity that has been accumulated. As long as the real estate market is strong, the seller is able to pay off the encumbrances and still retain some cash. Unfortunately, if the real estate market is weak, the seller may find that the market value of the property is unable to provide the desired profit from the sale. In extreme cases, the selling price of a property may not even be able to cover the encumbrances. In addition, if the buyer does not have the liquid capital to purchase the property, a transaction cannot occur. Often the buyer is the current owner of another property and the ability to buy a new property is dependent on the ability to sell the old property. Sale of the old property is a condition precedent to the purchase of the new property, due to the need for liquid capital to complete the proposed transaction. The importance of this requirement can be reduced if the reliance on liquid capital is minimized, thereby allowing more real estate transactions to occur.
Through the years, Congress has passed a series of legislative measures which have allowed the transfer of property from one owner to another to be "tax delayed" as long as the profits realized from the transfer were reinvested in a similar category of property within specified time periods. Since their implementation, these measures, as embodied in the tax codes, have encouraged creative real estate industry participants to establish trades between the owners of two properties without requiring large amounts of liquid capital to be available. The key feature in making these trades workable is that both parties must agree upon the amount of equity being traded. Occasionally one party will bring two properties into the trade to approximate the amount of equity presented by the other party. Of course, trades involving three or more parties are possible. All of these situations, however, rely on real estate agents who have access to a large number of property owners interested in potential trade situations.
Traditionally, for potential buyers and agents to become aware that a property is for sale, analysis of magazine advertisements, multiple listing publications, newspaper advertisements and word of mouth information was required. Today, however, electronic data systems have been established which help real estate agents learn of locally available properties. The agents using these systems are able to qualify the data retrieved by specifying price range, location and other physical characteristics. Such systems are usually designed to work only within their own communities and provide no automated way of exchanging data with other remote locations. Some nationwide data bases do exist, but they tend to cater to a large audience with a variety of interests and rely on the operators to properly select the desired information to be returned.
Those dealing in real property trades do so by making personal contact. This requires that the desires of two or more individual property owners and their mutual equity positions be known to an interested party, usually an agent, who becomes an information link. Such agents can make use of the existing information systems for finding or locating potential real estate transactions but, unfortunately, these systems focus on sales price and physical characteristics as the primary items for researching properties. To compensate, agents involved in real estate trades must maintain additional records about tradable properties, including where property owners might be willing to trade. Of course, two property owners interested in trading may not be interested in each others property. For example, one owner wants to use its equity to acquire another property. The second property owner, however, does not want to use its equity to acquire the first property, but is interested in a property elsewhere.
Accordingly, there has been a need for a system which increases the ability of an agent to evaluate potential trade scenarios. Preferably, such a system would be capable of developing potential trade scenarios, tracking the details of those scenarios, and helping to analyze the results. The potential trade scenarios would be developed by using a list of locations where property owners would be willing to move and comparing that list against the locations of other properties in the system. Moreover, there is a need for such a system which is useful to real estate agents in an environment in which available liquid capital for the purchase of real estate is reduced. The present invention fulfills these needs and provides other related advantages.